Cathie Wood Just Keeps Buying Coinbase and Getting More Inflows

1 week ago 8

(Bloomberg) -- After 1 of the astir melodramatic weeks yet for ARK Investment Management, Wall Street tin nary longer person immoderate doubts: Cathie Wood is sticking with her strategy -- and investors are sticking with her.

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The chances of some person been questioned this twelvemonth arsenic a selloff successful speculative tech stocks laid discarded to her future-focused exchange-traded funds. Wednesday was a peculiar debased point, with the flagship ARK Innovation ETF (ticker ARKK) slumping 10% successful its third-worst driblet connected record.

One of the biggest drags that time was Coinbase Global Inc., the largest US cryptocurrency exchange, which tumbled 26% aft disappointing results and amid a rout of integer assets. But portion the remainder of Wall Street was ditching the stock, Wood and her squad stuck to their playbook and utilized the driblet to summation holdings, adding astir 860,000 shares successful the week done Thursday.

In galore eyes, it’s a strategy that risks loading up connected losers. Hitched to a concentrated portfolio of often highly speculative bets, it leaves Wood and her steadfast with plentifulness of critics. But the clarity of the extremity -- chasing companies that tin triumph large from large technological shifts -- and ARK’s committedness to it has won immoderate remarkably loyal fans.

“Cathie Wood has not wavered astatine each successful her condemnation successful her strategy, and successful information has doubled down connected her strategy,” said Nate Geraci, president of The ETF Store, an advisory firm. “That’s charismatic to a definite conception of investors.”

As it plunged connected Wednesday, ARKK really posted inflows. It was a comparatively tiny magnitude for the $7.8 cardinal ETF -- astir $45 cardinal -- but nett inflows successful 2022 are much than $1.5 billion. That’s for a conveyance that has plunged arsenic overmuch arsenic 61% this year.

“Investors that are successful this strategy person stayed loyal to this strategy, person a semipermanent clip skyline and presumption selloffs arsenic opportunities to deploy immoderate further capital,” said Todd Rosenbluth, caput of probe astatine ETF Trends.

Of course, there’s besides nary shortage of investors acceptable to stake against ARK. Short involvement successful the main money is simply a comparatively elevated 14.8% of shares outstanding, according to information from IHS Markit Ltd.

Meanwhile, by the adjacent connected Wednesday the terms of the Tuttle Capital Short Innovation ETF, which aims to present the reverse show of the innovation money connected a regular basis, was much than treble that of the ARK ETF. In different words, betting against Wood’s flagship strategy for a time outgo doubly arsenic overmuch arsenic buying the money itself to hold.

But things were looking much affirmative for ARK by the extremity of the week arsenic tech stocks managed a rebound. The innovation money jumped 12% Friday aft climbing 5.6% a time earlier. One of Wood’s precocious illustration picks, Robinhood Markets Inc., was surging aft cryptocurrency billionaire Sam Bankman-Fried revealed a large stake.

It’s a agelong mode from undoing caller harm to Wood’s main ETF -- the money would person to leap astir 260% from present to reclaim its all-time high. But astatine slightest it provides immoderate respite for the faithful.

Ultimately, investors proceed to thin connected Ark ETFs arsenic vehicles to get successful and retired of disruptive technology. In a turbulent week for the flagship fund, trading measurement surged to a grounds 316 cardinal shares.

As Ark sticks to its strategy, investors “know precisely what they’re going to get” and tin trust connected its funds to marque pure-play trades connected innovation, Geraci said. “The payment of Cathie Wood not wavering from her strategy during this brutal downturn is that I deliberation it volition assistance the longer-term viability of Ark.”

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